Dollar Tree, Inc. reported that, as previously announced,
effective March 16, 2022, Richard W. Dreiling, was appointed
Executive Chairman and as a director of Dollar Tree, Inc. (the
“Company” or “Dollar Tree”), a leading operator of discount variety
stores, in connection with Dollar Tree’s entry into a Stewardship
Framework Agreement with affiliates of Mantle Ridge LP, an
investment fund.
Mr. Dreiling has more than 40 years of retail industry
experience at all operating levels and has a proven record of
success in the dollar store segment and other segments of the
retail market. He was the CEO of Dollar General Corporation from
2008 to his retirement in June 2015 and was the Chairman of Dollar
General Corporation from 2008 to January 2016. Prior to that, Mr.
Dreiling was the CEO and Chairman at Duane Reade (New York City’s
largest drug store), the Executive Vice President of Longs Drug
Stores and an Executive Vice President of Safeway and President of
a division of Safeway.
Since his retirement as the Dollar General CEO, Mr. Dreiling has
been an active director and board leader at a number of prominent
public companies, including Lowe’s Companies, Inc., Kellogg Co.,
PulteGroup and Aramark – each of which is relevant to his role at
the Company.
As a material inducement to persuade Mr. Dreiling to take an
active operating leadership role and employment with Dollar Tree as
Executive Chairman and to fully align his interests with the
interests of shareholders over the long term, in accordance with
Nasdaq Listing Rule 5635(c)(4), the Board of Directors of Dollar
Tree on March 19, 2022 entered into a five-year employment
agreement with Mr. Dreiling and granted him an option to purchase
2,252,587 shares of Dollar Tree common stock with a per-share
exercise price of $157.17, the per-share closing trading price of
Dollar Tree common stock on March 18, 2022.
The Dollar Tree share price increased ~45.4% over the four-month
period since Bloomberg published the rumors of Mantle Ridge’s
investment in Dollar Tree. The per-share closing Dollar Tree
trading price was $108.07 on November 4, 2021 and was $157.17 on
March 18, 2022, the last trading day preceding the option grant
date. This share price increase reflects ~$11 billion of
shareholder value.
The option award vests over five years and, in addition to an
annual base salary of $1 million, is the only direct compensation
that Mr. Dreiling will receive for his service as Executive
Chairman for the five-year term of his agreement. In particular,
Mr. Dreiling will not be eligible for annual or any other long-term
incentive awards. As a result, more than 95% of Mr. Dreiling’s
annualized compensation is fully at risk and aligned directly to
the creation of exceptional value for shareholders.
The Board of Directors believes the current share price reflects
market expectations of very material, positive improvements that
Mr. Dreiling is expected to make to Dollar Tree’s business. The
option has a per-share exercise price of $157.17, which means that
Mr. Dreiling will receive no compensation for delivering the first
~$49/share or ~$11 billion of transformational value to
shareholders, which as noted above the Board of Directors believes
is already embedded in the current share price. Economically, this
makes the Option Award very similar to an option with an exercise
price significantly above the current share price, a premium priced
option.
In the Board’s view, options are an ideal vehicle to support the
creation of long-term value for the direct benefit of shareholders.
Mr. Dreiling’s option will have economic value only if Mr. Dreiling
builds long-term shareholder value in excess of the market’s
expectation of transformational value built into the Company’s
current share price. The long-term, five-year vesting schedule and
ten-year term of the option award is intended to ensure that Mr.
Dreiling will remain focused on long-term value-creating activity,
including investments in talent and leadership, culture, succession
planning, technology and transformational change of the
business.
Dollar Tree believes Mr. Dreiling is in a unique position to
drive long-term shareholder benefit. The Board of Directors expects
him to be intimately involved in the operations of the Company and,
because he will not participate in the Company’s annual or other
long term incentive plans, he will be incentivized to make the
difficult decisions required to realize long-term value and will be
positioned to ensure that Dollar Tree’s incentive plans incorporate
metrics and targets that align directly with long-term shareholder
value creation.
The option award has design features that are aligned with
shareholder interests over the long term and tie Mr. Dreiling’s
compensation directly to increases in shareholder value. The option
is scheduled to vest in equal installments on each of the first
five anniversaries of the grant date. If Mr. Dreiling’s employment
is terminated by the Company without cause or by Mr. Dreiling for
good reason, Mr. Dreiling will vest only in the portion of the
option that would have vested through the 365th day after his
termination. If Mr. Dreiling’s employment is terminated by the
Company without cause or by Mr. Dreiling for good reason within six
months prior to, or two years following, a change in control of the
Company, Mr. Dreiling will vest only in a pro rata portion of the
award that would have vested at the next anniversary of the grant
date plus one additional annual tranche. If Mr. Dreiling retires,
as determined in the sole discretion of the Board of Directors, Mr.
Dreiling will vest only in a pro rata portion of the option that
would have vested at the next anniversary of the grant date. If Mr.
Dreiling voluntarily resigns, any unvested portion of the option
will be forfeited and the vested portion will be exercisable for
only 30 days. No portion of the option vests solely by reason of a
change in control of the Company.
About Dollar Tree, Inc.
Dollar Tree, a Fortune 200 company, operates more than 16,000
retail discount stores in 48 states and five Canadian provinces as
of January 29, 2022. Stores operate under the brands of Dollar
Tree, Family Dollar and Dollar Tree Canada. To learn more about the
Company, visit www.DollarTree.com.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release
contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by the fact that they address future
events, developments or results and do not relate strictly to
historical facts. Any statements contained in this press release
that are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements include,
without limitation, statements preceded by, followed by or
including words such as: “believe”, “anticipate”, “expect”,
“intend”, “plan”, “view”, “target” or “estimate”, “may”, “will”,
“should”, “predict”, “possible”, “potential”, “continue”,
“strategy”, and similar expressions. For example, our
forward-looking statements include statements regarding Mr.
Dreiling’s expected role and compensation as Executive Chairman,
our expectations regarding his focus on long-term value-creating
activity and transformational change of our business, and our other
plans, objectives, expectations (financial and otherwise) and
intentions. These statements are subject to risks and
uncertainties. For a discussion of the risks, uncertainties and
assumptions that could affect our future events, developments or
results, you should carefully review the "Risk Factors," "Business"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" sections in our Annual Report on Form
10-K filed March 15, 2022, and other filings we make from time to
time with the Securities and Exchange Commission. We are not
obligated to release publicly any revisions to any forward-looking
statements contained in this press release to reflect events or
circumstances occurring after the date of this report and you
should not expect us to do so.
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version on businesswire.com: https://www.businesswire.com/news/home/20220320005016/en/
Dollar Tree, Inc. Randy Guiler, 757-321-5284 Vice President,
Investor Relations www.DollarTree.com DLTR-G
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